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Commissioner Lara approves higher commercial coverage limits offered by California FAIR Plan

News: 2022 Press Release

For Release: March 10, 2022
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Commissioner Lara approves higher commercial coverage limits offered by California FAIR Plan
Expanded coverage will help youth camps and other businesses reopen with additional coverage they urgently need to operate and serve consumers after the pandemic

LOS ANGELES — Insurance Commissioner Ricardo Lara today approved increases in the limits of coverage to the California FAIR Plan Association’s (FAIR Plan) commercial programs that are offered to businesses, no later than May 1, 2022. This action by Commissioner Lara allows those businesses unable to secure insurance coverage in the normal insurance market with access to insurance they need to operate and continue the state’s economic recovery from the COVID-19 pandemic, especially in high wildfire risk areas.

“Businesses have been struggling. These increases in the limits of coverage will help youth camps reopen and businesses of all kinds keep serving their customers,” said Insurance Commissioner Ricardo Lara. “The FAIR Plan has not kept pace with rising costs for more than two decades, which my action addresses for the first time. Offering expanded coverage to businesses will help as our state continues its economic recovery from the pandemic.”

The increases approved today by Commissioner Lara expand the combined coverage limits for the FAIR Plan, under its Division I Commercial Property Program, from $4.5 million to $8.4 million, and, under its Division II Businessowners Program, from $3.6 million to $7.2 million.

Over the past two years, Commissioner Lara and Department of Insurance representatives have met with many businesses and non-profit entities across the state regarding their commercial insurance availability challenges.

“Commissioner Lara’s swift action will ensure that camps and non-profit youth serving organizations can keep their doors open and offer a safe and enriching experience for children and young adults,” said Gabe Valencia, Chair of the California Collaboration for Youth, which represents California’s recreational and youth camps. “We commend Commissioner Lara for continuing to hold the FAIR Plan and insurance companies accountable. Being assured of coverage at more reasonable rates will allow us to get back to what we do best: helping children make lifelong memories at camp.”

Groups such as farms, ranchers, agricultural operators and processors, wineries and vintners, residential care facilities, affordable housing entities, homeowners associations, and recreational/summer camps, among others, have informed Commissioner Lara about the continued lack of availability of commercial property insurance coverage in the traditional insurance market. Many of these businesses also noted that the FAIR Plan’s current commercial property coverage and business owners’ coverage limits have been insufficient to meet their coverage needs today.

“We thank Commissioner Lara for compelling the FAIR Plan to increase its coverage limits, which will help be a lifeline to farm owners and agricultural processing facilities in fire-prone areas that have lost coverage through the insurance market,” said Roger Isom, President and CEO of the California Cotton Ginners and Growers Association and Western Agricultural Processors Association. “Our growers will be able to expand their coverage and in turn continue to grow an essential sector of the state’s economy.”

Today’s action is a direct result of Commissioner Lara previously ordering the FAIR Plan to increase its own coverage limits. The Plan failed to meet the Commissioner’s deadline for a response describing how it would increase its commercial property coverage limits in response to his Order. These coverage limits have not been raised since at least 1997 and 1994 respectively, despite the Consumer Price Index showing costs have nearly doubled during that time in California.

“This is a long-overdue step to help business owners in our state. We will continue to listen to the concerns of business owners and ensure the FAIR Plan truly takes all comers and meets consumers’ evolving needs,” concluded Commissioner Lara.

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Led by Insurance Commissioner Ricardo Lara, the California Department of Insurance is the consumer protection agency for the nation's largest insurance marketplace and safeguards all of the state’s consumers by fairly regulating the insurance industry. Under the Commissioner’s direction, the Department uses its authority to protect Californians from insurance rates that are excessive, inadequate, or unfairly discriminatory, oversee insurer solvency to pay claims, set standards for agents and broker licensing, perform market conduct reviews of insurance companies, resolve consumer complaints, and investigate and prosecute insurance fraud. Consumers are urged to call 1-800-927-4357 with any questions or contact us at via webform or online chat. Non-media inquiries should be directed to the Consumer Hotline at 800-927-4357. Teletypewriter (TTY), please dial 800-482-4833.

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